Jamie Dimon, the normally unflappable chairman and chief executive of JP Morgan Chase, has in the past month been on the back foot after the US bank revealed it had suffered a $2bn trading loss carried out by the so-called London Whale.

Shareholders therefore closely watched his performance in front of the Senate Banking Committee yesterday, when he testified on the losses incurred by trades on a synthetic credit portfolio in the bank's London-based Chief Investment Office.

Prior to the testimony, Jaret Seiberg, an analyst at Guggenheim Partners, wrote a report saying that it was critical not just for JP Morgan but also for Bank of America, and Citigroup. Seiberg wrote: “If Dimon is able to put out the fire, then the threat to break up the big banks will subside. A poor performance will cause this crisis to accelerate and the threat to split up the mega banks will be greater.”

Investors were ultimately pleased with Dimon’s performance – as the most uncomfortable moment for the JP Morgan head proved to be before the committee got underway when protesters chanted about foreclosures.

After their removal, Dimon’s performance in front of the Senators was smooth and confident, helped by the fact that the soft-line of questioning failed to uncover any new information on the bank’s $2bn trading loss.

As a result of the kid gloves, the bank’s shares rose sharply as the hearing progressed. At 10.00 EST, when the hearing began, JP Morgan Chase’s share price was $33.89. By the time the hearing had finished, at 12.45 EST, it had risen by 3.4% to $35.04.

An investor who put a $1m bet on Dimon’s performance would have been able to buy 29,507.2 shares at the beginning of the hearing and sold at a quick $33,933 profit in less than three hours.

Bank of America's and Citigroup's shares also rose during this period (see chart), whereas the S&P 500 rose just 0.7% from 1317.64 to 1327.22.

Erik Oja, an equity analyst at S&P Capital IQ, told Financial News that the share price increase “was possibly due to relief that the losses appear to be manageable and Dimon’s testimony appeared to be truthful”.

However, he pointed out the rise was still not enough to make up for the 25% fall since the announcement of the loss in May.

Dimon told the committee he could not talk too much about the specifics of the London Whale trade as the bank was still unwinding the position, but did say they were carried out by the CIO to hedge the bank against a systemic deterioration in credit markets if there is an event similar to the collapse of Lehman Brothers.

Dimon apologised for the loss and said: “The way it was contrived it was hedging, what it became is not something I can publicly defend.”

This prompted the toughest question of the session from Senator Bob Menendez who asked: “What did it morph into? Russian roulette?”

Dimon was later rebuked by Senator Jeff Merkley after a disagreement about whether or not JP Morgan was forced into taking bailout money from the US government in 2008. Senator Merkley told Dimon: “Sir, this is not your hearing”.

But these proved to be the few moments of tension for the chairman and chief executive, who was given lots of time by the Senators to air his concerns about banking regulation, including the US Dodd-Frank Act and the Volcker Rule.